Queensland avoids the potholes

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21 August 2014: It’s a good news story for the Queensland economy as the State navigates the transition from mining investment and construction to production and exports, and towards gas as it grows to take its significant position alongside coal. And in spite of the high Aussie dollar, international tourism is up and expected to encourage international student numbers.

Add to this the April 2014 signing of the Australia Japan Free Trade Agreement which will slash the tariffs on Queensland’s frozen beef exports over time, and Queensland homebuilding starting its come back, and the State has a lot to feel confident about.

But as John Greig, Deloitte Queensland Managing Partner said: “The Queensland economy is really back, but it doesn’t feel like it yet.”

“We’ve been hammered so hard by layoffs in the mining industry and the challenges of getting coal seam gas and LNG up, that it has been hard to see the forest for the trees and really appreciate how big the LNG industry is going to be in revenue terms, or that our tourism numbers are increasing.”

Chris Richardson from Deloitte Access Economics, who launched the 2014 gala edition of the Deloitte Queensland Index with Greig said: “Queensland’s economy is performing better than its residents realise, and the State is predicted to outperform New South Wales and Victoria over the coming years in terms of population growth, employment growth and overall economic growth."

"Queenslanders have a lot to feel positive about. The State’s project pipeline is pretty well spaced, which leaves it at less risk of a pothole in activity between resource-related construction projects finishing and most resource export volumes picking up.”

He said that the FTA with Japan had bound tariffs on wool, cotton, lamb and beer at zero, and that cutting tariffs on frozen beef, over the next 18 years, from 38.5% to 19.5%, was a big win for the $1.4 billion beef export industry which is Australia’s largest agricultural export to Japan.

Richardson said all the signs were there that Australia’s ‘next wave’ economic sectors of gas, tourism, agribusiness, and international education, as well as the potential for wealth management, were gathering momentum.

The three major export LNG projects currently underway at Gladstone have a combined planned capacity of more than 25 million tonnes of LNG per annum, with the first LNG delivery planned for late 2014 and early 2015.

“This represents some $10 billion in revenue annually for the supply of gas at current pricing. To put this in context, the gross annual value of all agriculture for Queensland is also estimated at $10 billion,” Richardson said.

Greig concluded: “As we move into the mining and gas production phases, and hopefully assisted by a weaker Australian dollar, we can look forward to more broad based and stable growth over the coming years.”

“And as we continue to export record tonnages of coal, a weaker Australian dollar and better coal prices will also be great news as our take or pay commitments run out.

“In addition to the global appetite for clean fuel which our gas industry will deliver, Queensland still has some of the best and most extensive reserves of metallurgical coal in the world, and we are well positioned to supply coal power generation needs of the region.”

What do you think?

@DeloitteNewsAU

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